DRAW THE Cash Flow Diagrams:

-A piece of equipment is purchased for $20,000. Its annual operating and maintenance expenses are $1000 in year 1, increasing $500 per year over the next four years. The asset is sold for $2000 at the end of the fifth year.

-A facility is built over four quarters at the cost of $300,000 per quarter. Net revenues total $40,000in the first quarter following completion of the facility and are expected to grow by 2.4% per quarter. The facility is closed after five years of operations at the cost of $15,000.

-Devon Energy of Oklahoma City, Oklahoma, purchased Ocean Energy for $6billionin2003,to become the largest independent oil and natural-gas producer in the United States." Assume that Ocean Energy produced 200,000 barrels of oil or oil equivalents per day before the Devon purchase, that oil sells for $40 a barrel, and that the cost to produce a barrel is $15. Consider a 10-year horizon, at which time Devon will sell the fields for $500 million. Assume end-of-year cash flows (250 production days per year) and draw the cash flow diagram for Devon Energy's investment.

-A piece of equipment is purchased for $20,000. Its annual operating and maintenance expenses are $1000 in year 1, increasing $500 per year over the next four years. The asset is sold for $2000 at the end of the fifth year.